Euro Pound forecast: GBP falls with election speculation

GBPEUR and Brexit; When is a Deadline a Deadline?

Is the Euro going to go up? UK general election likelier

UK Prime Minister (PM) Boris Johnson has stated that he doesn’t want a general election, but that doesn’t mean we won’t get one. Members of Parliament (MPs) are planning to put through legislation this evening, to force the PM to delay Brexit until 31st January, unless he can get a new deal in place with the European Union by mid-October.

The PM will try to trigger a snap election on Oct. 14 if he loses the vote in Parliament. There is now a high probability of a general election before the end of the year. This does not bode well for the Pound. If we look historically, the Pound tends to suffer during general elections, for example the 2010 election bares testament to this.

The chances of Mr. Johnson obtaining a favourable deal also seems slim. Brussels has reiterated that there will be no concessions made on the Northern Irish border. Generally speaking, the higher the probability of a ‘no deal’, the weaker you would expect the Pound to become.

When should I buy Euros? ECB looks set to cut interest rates

The Eurozone has its own problems. Low inflation may force the European Central Bank’s (ECB) hand, and they may either put interest rates into negative territory or implement further Quantitative Easing (QE). QE is essentially pumping money into an economy in order to stimulate economic growth. The drawback is that this puts a huge amount of debt on the region in question. You would expect both these monetary policy options to weaken the Euro.

However, it is likely that the lack of clarity surrounding Brexit will considerably outweigh the problems in the Eurozone. GBP/EUR has lost nearly a cent overnight, and yet the Euro is close to a two-year low against the US Dollar. This highlights how fragile the Pound actually is.

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